Nomura - Oil & Gas, Chemicals 30 Sept 2010

Oil & Gas/Chemicals | G L O B A L
OI L M AR K E T UP D AT E : 30 SEP TEM BE R, 20 10
NOMURA INTERNATIONAL (HK) LIMITED
Michael Lo, CFA +852 2252 6225 michael.lo@nomura.com

Cheng Khoo +852 2252 6180 cheng.khoo@nomura.com RUNNING
THEME
This week’s highlights

Our latest research on Iran shows that the recent Japanese sanctions against Iran
could reduce global oil supply by 0.5mmbbl/d as the sanctions could reduce export W E E K L Y
from Iran in the near term. Recent weakness in US dollar and the expectation of QE2
has pushed oil prices higher but the recent gain in oil prices appears to be lagging
other commodities’ price gain.
Oil Market Update Analysts

 Recent sanctions by the United Nations, United States, European Union and now Michael Lo, CFA
Japan and South Korea, have caused significant delays in the development of oil +852 2252 6225
michael.lo@nomura.com
and gas fields in Iran. In our latest report titled Iran – Sanctions and delays, dated
30 September 2010, we have looked at the current sanctions on Iran and its impact
Cheng Khoo
on the country’s oil and gas sector. The latest sanction from Japan against Iran +852 2252 6180
could force oil exports to below 1.5mmbbl/d in the near term from the current cheng.khoo@nomura.com
2.0mmbbl/d, negatively affecting global supply while helping push oil prices higher.
Longer term, the sanctions will limit oil and gas production from one of the most
prolific and low-cost producing regions. This will limit future supply growth, causing
prices to escalate. The delay in the development of fields and high decline rate in
older fields (8-10%) will likely lead to a decline in Iran’s oil production capacity by
15% from 2010-15, compared with the country’s pre-sanction target of 35% growth.
The Iranian crude production target will likely decline from a pre-sanction target of
5.3mmbbl/d to only 3.34mmbbl/d by 2015, which is below the current production
capacity of 3.93mmbbl/d. Similarly, we believe that Iran’s gas production is also
unlikely to proceed as planned. New sanctions have caused IOCs to cancel
existing contracts with Iran, delaying new gas production significantly from pre-
sanction growth of 25.1% to only 9.2% by 2015. As a result, on 9 August 2010, the
Iranian oil ministry announced that the country is putting its plans to create an LNG
industry on hold. Please read our report Iran – Sanctions & delays for more details.
 WTI crude price rose 2.2% yesterday to US$77.9/bbl after demand for oil products Also see our note: “Iran – Sanctions &
delays” (30 September 2010)
in the US rose 2.8% w-w in the week ending 24 Sept, as per the latest Energy
Information Administration (EIA) weekly inventories report. Even after the end of
the summer driving season, gasoline demand rose by 6.1% w-w to 9.4mmbbl/d
pushing down stocks by 3.5mmbbl w-w (Consensus: 0.3mmbbl build). Distillate
demand also rose by 5.7% w-w to 3.9mmbbl/d lowering stocks by 1.3mmbbl w-w
(Consensus: 0.3mmbbl build). Crude stocks also fell by 0.5mmbbl w-w on 3.4%
lower weekly imports. Crude throughput at domestic refineries in the US now
stands at 14.7mmbbl/d, 0.5% higher y-y and 1.7% higher than its five-year average.
 Open interest for WTI futures fell by 2.9% w-w in the week ended 24 September.
However, Brent futures’ open interest fell by 1.0% w-w. Open interest for WTI and
Brent now stands at 1.32mn and 0.75mn, respectively. WTI open interest is now
4.6% higher than the August average of 1.26mn, whereas Brent open interest is
now 4.8% lower than the August average of 0.78mn. The aggregate open interest
for WTI and Brent futures is now at 2.06mn, down 2.2% w-w.
Any authors named on this report are research analysts unless otherwise indicated.
See the important disclosures and analyst certifications on pages 18 to 21.
Nomura 1 30 September 2010

Oil & Gas/Chemicals | Global Michael Lo, CFA / Cheng Khoo
Exhibit 1. Price summary

Commodity Units Price Daily Change % Daily Change Weekly Change % Weekly change Yearly Change % Yearly change
Crude Oil and Products 29-Sep-10
WTI $/bbl 77.86 1.68 2.21% 4.48 6.11% 7.25 10.27%
WTI, 48-month $/bbl 88.45 1.11 1.27% 1.53 1.76% 9.18 11.58%
Brent $/bbl 80.06 1.73 2.21% 2.54 3.28% 15.31 23.64%
Brent, 48-month $/bbl 89.68 1.44 1.63% 1.54 1.75% 10.68 13.52%
Oman $/bbl 75.04 -0.85 1.17% -1.79 -2.33% 9.94 15.27%
Dubai $/bbl 74.67 -0.85 -1.13% -1.79 -2.34% 5.94 8.64%
OPEC Basket $/bbl 74.87 -0.19 -0.25% -0.47 -0.62% 10.62 16.53%
RBOB c/g 199.55 4.76 2.44% 7.81 4.07% 36.74 22.57%
Heating Oil c/g 219.05 6.60 3.11% 7.60 3.59% 48.99 28.81%
ICE Gasoil $/ton 687.75 5.75 0.84% 17.75 2.65% 145.50 26.83%
Source: Bloomberg
Exhibit 2. 2010 YTD performance of commodities in CRB Commodity Index
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
Nickel
Heating Oil
Crude Oil
Orange Juice
Nat Gas
Cotton
Gold
Corn
Live Cattle
Aluminium
Gasoline
Cocoa
Copper
Lean Hogs
Soybean
Wheat
Silver
Sugar
Coffee
Source: Bloomberg, Nomura research
Exhibit 3. Iran pre & post-sanction targets Exhibit 4. Iran crude production capacity estimates
g ( )
mb/d Current Prod Capacity 6.0 mb/d
bcm/yr Nomura IEA Iran Government
Pre-sanction target (2015E)
6.0 Post-sanction target (2015E) 500
5.0
5.0 400
4.0
4.0
300
3.0
3.0
200
2.0 2.0
1.0 100
1.0
0.0 0 -
Oil (lhs) Gas (rhs) 2010E 2011E 2012E 2013E 2014E 2015E
Source: BP, Bloomberg, Nomura estimates Source: International Energy Agency, Nomura estimates

Weekly events summary

1. Oil may exceed US$80/bbl if global economic growth is 3.0-3.5% - IEA
The IEA does not expect oil prices to spike in 2010 and 2011 due to excess
capacity.
2. US may end deepwater drilling ban ‘soon’, says US Interior Secretary

Most milestones of deepwater drilling have been met according to the new rules.
3. Iraq plans to increase offshore oil-loading capacity
Three single-buoy moorings of 0.9mmbbl/d each and two offshore pipelines have
been planned by the oil ministry.
4. Nigeria aims to increase crude output to 3.3mmbbl/d in the next four years
Major oil projects in Nigeria aim to increase crude output by 1.1mmbbl/d by 2014.
Key oil market events during the week

1. Oil may exceed US$80/bbl if global economic growth is 3.0-3.5% - IEA: On 29
September, Faith Birol, Chief Economist of the International Energy Agency (IEA),
said that oil prices may rise above US$80/bbl if global GDP growth is 3.0-3.5%.
However, he does not expect sharp price rises in 2010 and 2011 due to excess
capacity. He also added that oil prices could fall if the global economy faces a
double-dip recession, causing economic activity to fall. In its latest oil market
report, the IEA has estimated oil demand growth of 1.9mmbbl/d y-y in 2010 and
1.3mmbbl/d in 2011. (Source: Thomson Reuters)
2. US may end deepwater drilling ban ‘soon’, says US Interior Secretary: On 28

September, US Interior Secretary, Kenneth Salazar said that the US government
may lift the federal ban on deepwater oil drilling ‘soon’. He did not give a particular
time frame for this suspension. On 12 July 2010, the US had imposed new rules
on offshore drilling in waters deeper than 500 feet, after a New Orleans judge had
found an earlier moratorium too broad. According to the Secretary, now that the
milestones for deepwater drilling have been met or are likely to be reached in the
coming days, the ban on offshore drilling could be suspended. (Source:
Bloomberg)
Exhibit 5. US offshore rig count
90 Rig Count Rig Count YoY YoY 80%

80 60%
70 40%
60
20%
50
0%
40
-20%
30
20 -40%
10 -60%
0 -80%
Apr-08
Apr-09
Apr-10
Jan-08
Jul-08
Oct-08
Jan-09
Jul-09
Oct-09
Jan-10
Jul-10
Source: Baker Hughes, Bloomberg, Nomura research
3. Iraq plans to increase offshore oil-loading capacity: According to the Iraqi

government’s oil advisor, the country is planning to increase its offshore oil-loading
capacity by 2.7mmbbl/d. He added that the oil ministry aims to seek the

government’s approval within the next two weeks for the same. Iraq plans to build
two offshore pipelines and three single-buoy moorings. Each mooring will add
0.9mmbbl/d of loading capacity. Iraq has been having trouble exporting oil out of
the country due to low export terminal capacity and the new moorings and
pipelines are a step towards increasing this capacity. In August 2010, Iraq
exported 1.78mmbbl/d of crude oil, down 2.0% m-m. (Source: Bloomberg)
4. Nigeria aims to increase crude output to 3.3mmbbl/d in the next four years:
According to Thomson Reuters, Nigerian oil projects aim to increase the country’s
crude oil production in the next four years by 1.15mmbbl/d. Currently, Nigeria
produces more than 2.0mmbbl/d and with the oil projects scheduled till 2014, the
country’s output can increase to 3.3mmbbl/d. (Source: Thomson Reuters)
Exhibit 6. Major Nigerian oil projects

Field (Company) Location On-stream by Production capacity
year kbbl/d
Usan (Total) Deepwater 2012 180
Sattellites I (Exxon Mobil) Offshore 2011-12 70
Sattellites II (Exxon Mobil) Offshore 2013 300
Gbaran-Ubie (Shell) 2011 70
Bonga North (Shell) Deepwater 2011 100
Bonga Southwest (Shell) Deepwater 2013 140
Bosi (Exxon) Offshore 2013 135
Erha North (Exxon) Offshore 2013 50
Egina (Total) Deepwater 2014-15 100
Total 1,145
Source: Thomson Reuters

Crude oil
Exhibit 7. Crude oil runs

Global Runs OECD
76 mmb/d 42 mmb/d
40
74
38
72
36
70
34
68 32
J F M A M J J A S O N D J F M A M J J A S O N D
Prior3 Year Range Prior 3 Year Average 2009 2010 Prior3 Year Range Prior 3 Year Average 2009 2010
Source: IEA Source: IEA
United States OECD Europe

17 mmb/d 15 mmb/d
16
14
15
14 13
13
12
12
11 11
Prior 5 Year Range Prior 5 Year Average 2009 2010 Prior5 Year Range Prior 5 Year Average 2009 2010
Source: DOE Source: IEA
China India
9.0 mmb/d 3.8 mmb/d
8.0 3.4
7.0 3.0
6.0 2.6
5.0 2.2
Prior 5 Year Range Prior 5 Year Average 2009 2010 Prior 5 Year Range Prior 5 Year Average 2009 2010
Source: Thomson Reuters Source: Thomson Reuters * excludes new RPL refinery
Korea Japan
3.0 mmb/d 5.0 mmb/d
4.5
2.5
4.0
3.5
2.0
3.0
1.5 2.5
Source: Petronet Source: Petroleum Association of Japan

Exhibit 8. OECD inventories

Total OECD Stocks OECD Oil Product Stocks
4,400 mmb 1,800 mmb
4,300
1,700
4,200
1,600
4,100
4,000 1,500
Prior4 Year Range Prior 4 Year Average 2009 2010 Prior4 Year Range Prior 4 Year Average 2009 2010
Source: IEA * includes both crude and products Source: IEA
Exhibit 9. Crude inventories

OECD United States
2,400 mmb 400 mmb
2,300 350
2,200
300
2,100
J F M A M J J A S O N D 250
Prior4 Year Range Prior 4 Year Average 2009 2010 J F M A M J J A S O N D
Prior 5 Year Range Prior 5 Year Average 2009 2010
Source: IEA Source: DOE
OECD Europe China

580 mmb 230 mmb
220
540
210
200
500
190
460
J F M A M J J A S O N D 180
Prior4 Year Range Prior 4 Year Average 2009 2010 J F M A M J J A S O N D
2010
Source: IEA Source: Xinhua News Agency, Thomson Reuters * commercial
Korea Japan
40 mmb 140 mmb
130
30
120
20 110
100
10
90
0 80

Exhibit 10. OECD imports

Total OECD Imports Total OECD Oil Product Imports
36 mmb/d 10 mmb/d
9
34
32
30
6
28 5
Source: IEA Source: IEA
Exhibit 11. Crude oil imports

OECD United States
28 mmb/d 12 mmb/d
11
26
10
24
9
22
8
20 7
OECD Europe China

11 mmb/d 6.0 mmb/d
5.0
10
4.0
3.0
9
2.0
1.0
8
J F M A M J J A S O N D
Source: IEA Source: Thomson Reuters
Korea Japan
3.5 mmb/d 5.5 mmb/d
5.0
3.0
4.5
2.5
4.0
2.0
3.5
1.5 3.0
Source: Petronet Source: METI, Thomson Reuters

Total products
Exhibit 12. Total product demand

OECD United States
53 mmb/d 23 mmb/d
22
51
21
49
20
47
19
45
18
43 17
Prior5 Year Range Prior 5 Year Average 2009 2010 Prior 5 Year Range Prior 5 Year Average 2009 2010
OECD Europe India

17 mmb/d 15 m Tonnes
13
16
11
15
9
14
7
13 5
Source: IEA Source: Thomson Reuters
Korea Japan
2.7 mmb/d 6 mmb/d
2.5
5
2.3
2.1 4
1.9
3
1.7
1.5 2

Gasoline
Exhibit 13. Gasoline demand

OECD United States
17 mmb/d 10.0 mmb/d
16 9.5
15 9.0
14 8.5
13 8.0
OECD Europe China

3.2 mmb/d 1.9 mmb/d
3.0
1.7
2.8
1.5
2.6
2.4 1.3
2.2
1.1
2.0
1.8 0.9
Source: IEA Source: Thomson Reuters *Implied Demand
Korea Japan
0.22 mmb/d 1.4 mmb/d
0.20
1.2
0.18
0.16
1.0
0.14
0.12 0.8
India
0.40 mmb/d
0.35
0.30
0.25
0.20
0.15

Exhibit 14. Gasoline inventories

OECD United States
450 mmb 250 mmb
420
230
390
210
360
190
330
300 170
Source: IEA *Industrial stocks Source: DOE
OECD Europe China

130 mmb 65 mmb
60
120
55
110
50
100
45
90 40
Prior4 Year Range Prior 4 Year Average 2009 2010 2010
Source: IEA * Industrial stocks Source: China OGP, Xinhua News Agency * Commercial
Korea Japan
5.0 mmb 17 mmb
16
15
4.0
14
13
3.0
12
11
2.0 10
Singapore
13 mmb
11
5

Distillates
Exhibit 15. Distillate demand

OECD United States
16 mmb/d 5.0 mmb/d
4.5
14
4.0
3.5
12
3.0
10 2.5
OECD Europe China

7.0 mmb/d 3.6 mmb/d
6.6 3.2
6.2
2.8
5.8
2.4
5.4
2.0
5.0
J F M A M J J A S O N D 1.6
Prior 5 Year Range Prior 5 Year Average 2009 2010 J F M A M J J A S O N D
Source: IEA
Source: Thomson Reuters *Implied Demand
Korea Japan
0.50 mmb/d 0.8 mmb/d
0.7
0.40
0.6
0.30
0.5
0.20 0.4
India
1.4 mmb/d
1.2
1.0
0.8
0.6

Exhibit 16. Distillate inventories

OECD United States
700 mmb 190 mmb
170
600
150
130
500
110
400 90
Source: IEA *Industrial stocks Source: DOE
OECD Europe China

320 mmb 90 mmb
290 80
260 70
230 60
200 50
Prior4 Year Range Prior 4 Year Average 2009 2010 2010
Source: IEA *Industrial stocks Source: China OGP, Xinhua News Agency * Commercial
Korea Japan
18 mmb 17 mmb
15
15
13
12
11
9
9
6 7
Singapore
18 mmb
14
10
2

Exhibit 17. Trading summary

ICE Brent Futures Aggregate Open Interest Nymex WTI Futures Aggregate Open Interest
contracts contracts
1,000,000 1,500,000
900,000 1,400,000
800,000
1,300,000
700,000
1,200,000
600,000
500,000 1,100,000
400,000 1,000,000
May-08
May-09
May-10
May-08
May-09
May-10
Mar-08
Nov-08
Mar-09
Nov-09
Mar-10
Mar-08
Nov-08
Mar-09
Nov-09
Mar-10
Jan-08
Feb-08
Apr-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Dec-08
Jan-09
Feb-09
Apr-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Dec-09
Jan-10
Feb-10
Apr-10
Jun-10
Jul-10
Aug-10
Sep-10
Jan-08
Feb-08
Apr-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Dec-08
Jan-09
Feb-09
Apr-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Dec-09
Jan-10
Feb-10
Apr-10
Jun-10
Jul-10
Aug-10
Sep-10
Source: Bloomberg Source: Bloomberg
ICE Brent: Price versus Open Interest NYMEX WTI: Price versus Open Interest
$/bbl $/bbl
100
100
90 90
80 80
70 70
60 60
50 50
-6M 0M 6M 12M 18M 24M 30M 36M 42M 48M -5 0 5 10 15 20 25 30 35 40 45
Current Previous Week Previous Year Current Previous W eek Previous Year
Source: CFTC, Bloomberg Source: CFTC, Bloomberg
Exhibit 18. OPEC crude oil statistics

OPEC Crude - Production, Capacity & Quota OPEC Spare Capacity - August 2010
mmbls/ d 4.8 mmb/ d
3.92
34.0 4.0
31.0 3.2
2.4
28.0
1.6
25.0
0.8 0.40
0.26 0.28 0.14 0.21 0.22 0.21 0.18
0.12 0.11 0.02
22.0 0.0
Libya
Kuwait
Qatar
Ecuador
Angola
Algeria
Nigeria
U.A.E
Venezuela
Iran
Iraq
Arabia
Saudi
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
OPEC Crude Production Capacity OPEC Crude Production OPEC Quota

Source: IEA Source: IEA, Nomura Research
Exhibit 19. International rotary rig count

World Oil Rig Count US Oil Rig Count
1,800 700
50% 1,700
600
1,600
30% 1,500 500
1,400
400
10% 1,300
1,200 300
-10% 1,100
200
1,000
-30% 900 100

2010 Y-o-Y %age 2009 Y-o-Y %age 2007 2008 2009 2010 Prior 5 Year Range Prior 5 Year Average 2009 2010
Source: Baker Hughes, Nomura Research Source: Baker Hughes, Nomura Research

Exhibit 20. US Department of Energy’s weekly summary table

Data Product 9/24/2010 9/17/2010 W-o-W W-o-W % 9/25/2009 Y-o-Y Y-o-Y % 5 YR AVG ∆ from 5YR AVG % from 5YR AVG
Stocks Crude Oil 358 358 (0.5) -0.1% 338 19.5 5.7% 318 40.17 12.6%
(mmb) Motor Gasoline 223 226 (3.5) -1.5% 211 11.1 5.3% 199 23.14 11.6%
Distillate 174 175 (1.3) -0.7% 171 2.5 1.5% 143 30.57 21.4%
Diesel (>15 to 500 ppm) 13 14 (0.4) -3.3% 20 -6.8 -34.1% 35 (21.34) -61.8%
Diesel (<15 ppm) 108 110 (2.0) -1.8% 100 8.2 8.2% 58 50.06 86.3%
Heating Oil (>500 ppm) 52 51 1.2 2.3% 51 1.2 2.3% 50 1.87 3.7%
Kerosene-Type Jet Fuel 48 48 (0.0) -0.1% 46 2.1 4.5% 41 6.98 17.0%
Residual Fuel Oil 39 39 0.1 0.2% 34 5.3 15.7% 37 2.62 7.2%
Crude Oil Runs (kbd) 14666 15047 (381) -2.5% 14591 75 0.5% 14418 248 1.7%
Capacity Utilization (%) 85.8 87.8 (2.0) 84.6 1.2 84.2 1.6
Weekly Crude Oil 9005 9322 (317) -3.4% 9533 (528) -5.5% 9796 (791) -8.1%
Imports Motor Gasoline 881 850 31 3.6% 851 30 3.5% 1117 (236) -21.2%
(kbd) Distillate 195 203 (8) -3.9% 150 45 30.0% 205 (10) -4.9%
Diesel (>15 to 500 ppm) 7 7 0 5 2 21 (14) -66.7%
Diesel (<15 ppm) 166 163 3 1.8% 130 36 27.7% 117 49 41.6%
Heating Oil (>500 ppm) 23 33 (10) -30.3% 15 8 53.3% 67 (44) -65.6%
Kerosene-Type Jet Fuel 120 98 22 22.4% 115 5 4.3% 153 (33) -21.4%
Residual Fuel Oil 314 352 (38) -10.8% 377 (63) -16.7% 341 (27) -7.8%
Demand Motor Gasoline 9.4 8.8 0.5 6.1% 9.1 0.3 2.8% 9.0 0.4 4.5%
(mbd) Distillate 3.9 3.7 0.2 5.7% 3.4 0.5 14.4% 3.9 (0.0) -0.7%
Kerosene-Type Jet Fuel 1.4 1.5 (0.1) -8.5% 1.4 (0.1) -5.0% 1.5 (0.2) -10.7%
Residual Fuel Oil 0.4 0.5 (0.1) -11.8% 0.4 (0.0) -5.0% 0.6 (0.2) -29.5%
Total Products 19.7 19.2 0.5 2.8% 18.9 0.8 4.2% 19.6 0.1 0.6%
Source: Energy Information Administration, Nomura Research
Exhibit 21. Weather update and forecast

Average Temperature 6-10 Days Forecast
Code Colour Shading Forecast

A Orange-Red Above Normal
B Blue Below Normal
N White Neutral
* * Numbers indicate %age probability above/below normal
Source: National Weather Service, United States

2.00
3.00
4.00
5.00
6.00
7.00
China
800
1000
1200
1400
1600
$0.50
$1.50
$2.50
$1.00
$2.00
$3.00
$4.00
$5.00
Europe
Apr-02 Jul-05 Jan-06
Oct-05
Nomura
USD/ gal
CN Y/ litre
Singapore
SGD/ litre
Oct-05 Apr-06 Jan-06 United States
Oct-02
EUR/ '000 litre
Source: Bloomberg
Jan-06 Jul-06 Apr-06
Apr-03
Source: Bloomberg
Apr-06 Oct-06 Jul-06
Oct-03
Jul-06 Oct-06
Jan-07
Apr-04 Oct-06
Apr-07 Jan-07
Oct-04 Jan-07 Apr-07
Jul-07
Apr-07 Jul-07
Apr-05
Oil & Gas/Chemicals | Global
Oct-07
Jul-07 Oct-07
Oct-05 Jan-08
Singapore Gasoline
Europe Gasoline
China Gasoline
Oct-07
US Gasoline
Jan-08
Apr-06 Apr-08
Jan-08
Apr-08
Oct-06 Jul-08
Apr-08
Jul-08
Oct-08
Apr-07 Jul-08
Oct-08
Oct-08 Jan-09
US Diesel
Oct-07 Jan-09
China Diesel
Europe Diesel
Jan-09 Apr-09
Apr-09
Apr-08
Singapore Diesel
Apr-09 Jul-09
Jul-09
Oct-08
Jul-09 Oct-09 Oct-09
Apr-09 Oct-09 Jan-10 Jan-10
Oct-09 Jan-10 Apr-10 Apr-10
Apr-10
Apr-10 Jul-10 Jul-10
Jul-10
Exhibit 22. Global retail prices for gasoline and diesel
India
40
60
80
100
120
140
160
60
80
100
120
140
160
180
200
15
20
25
30
35
40
45
50
55
Korea
Japan
500
1000
1500
2000
Jan-00
Canada
Jul-02 Jun-04
Jan-04
CAd/ litre
JPY/ litre
IN R/ litre
Jul-00
KRW / litre
Oct-04
May-04 Jan-03
Jan-01
Sep-04 Feb-05
Jul-03 Jul-01
Jan-05 Jun-05
Jan-04 Jan-02
May-05 Oct-05
Jul-02
Jul-04
15
Sep-05
Michael Lo, CFA / Cheng Khoo
Feb-06 Jan-03
Jan-06 Jan-05 Jun-06 Jul-03
May-06 Jan-04
Jul-05 Oct-06
Sep-06 Jul-04
Jan-06 Feb-07
Canada Gasoline
Japan Gasoline
Korea Gasoline
Jan-07 Jan-05
India Gasoline
Jun-07
May-07 Jul-06
Jul-05
Oct-07
Sep-07 Jan-07 Jan-06
Feb-08
Jan-08 Jul-06
Jul-07
Jun-08
May-08 Jan-07
Japan Diesel
Korea Diesel
India Diesel
Jan-08
Canada Diesel
Sep-08 Oct-08 Jul-07
Jan-09 Jul-08 Feb-09 Jan-08
May-09 Jun-09 Jul-08

Jan-09
Sep-09 Jan-09
Oct-09
Jul-09
Jul-09
Jan-10 Feb-10
Jan-10 Jan-10
May-10
30 September 2010
Jun-10
Jul-10
Sep-10 Jul-10
Exhibit 23. Global supply/demand balance

2009 2010F 2011F Chg, 10 vs 09 Change, 11 vs 10
(mmbbl/d) 2006 2007 2008 Q1 Q2 Q3 Q4 2009 Q1 Q2F Q3F Q4F 2010F Q1F Q2F Q3F Q4F 2011F 2012F (mmbbl/d) (%) (mmbbl/d) (%)
Demand
North America 25.4 25.5 24.2 23.5 22.9 23.2 23.6 23.3 23.5 23.4 23.5 23.9 23.6 23.8 23.7 23.9 24.1 23.9 24.0 0.3 1.1 0.3 1.3
Europe 15.7 15.3 15.3 14.9 14.2 14.5 14.4 14.5 14.7 14.4 14.6 14.6 14.5 14.8 14.7 14.7 14.8 14.7 14.9 0.0 0.3 0.2 1.3
Pacific 8.5 8.4 8.1 8.1 7.3 7.3 8.0 7.7 8.1 7.3 7.4 8.0 7.7 8.1 7.4 7.5 8.1 7.7 7.8 0.0 0.3 0.0 0.5
OECD 49.5 49.2 47.6 46.6 44.4 45.0 46.0 45.5 46.2 45.1 45.5 46.5 45.8 46.6 45.7 46.1 47.0 46.3 46.6 0.3 0.7 0.5 1.2
FSU 4.0 4.1 4.2 3.9 3.8 4.0 4.0 3.9 4.1 4.0 4.2 4.1 4.1 4.2 4.1 4.3 4.4 4.2 4.3 0.2 4.1 0.1 3.3
Europe 0.7 0.8 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.9 0.8 0.8 0.0 1.7 0.0 6.5
China 7.2 7.6 7.9 7.7 8.6 8.8 8.9 8.5 8.8 9.3 9.3 9.5 9.2 9.3 9.5 9.7 9.8 9.6 10.0 0.7 8.6 0.3 3.8
Other Asia 9.0 9.5 9.7 10.0 10.1 9.8 10.1 10.0 10.3 10.2 10.1 10.4 10.2 10.4 10.5 10.4 10.7 10.5 10.8 0.2 2.2 0.3 2.6
Latin America 5.4 5.7 5.9 5.7 5.9 6.1 6.1 5.9 5.9 6.1 6.2 6.3 6.1 6.1 6.3 6.3 6.4 6.2 6.4 0.1 2.4 0.2 2.5
Middle East 6.3 6.5 7.1 6.7 7.3 7.8 7.1 7.2 7.0 7.6 8.1 7.3 7.5 7.5 7.8 8.3 7.6 7.8 8.0 0.3 3.6 0.3 4.1
Africa 3.0 3.1 3.2 3.2 3.2 3.2 3.2 3.2 3.3 3.3 3.3 3.3 3.3 3.4 3.3 3.4 3.4 3.4 3.4 0.1 3.0 0.1 2.2
Non OECD 35.7 37.3 38.7 37.9 39.7 40.3 40.1 39.5 40.1 41.1 41.7 41.5 41.1 41.5 42.2 43.0 43.2 42.5 43.6 1.6 4.1 1.3 3.2
Total demand 85.2 86.5 86.2 84.5 84.1 85.3 86.1 85.0 86.3 86.2 87.2 88.0 86.9 88.1 87.9 89.0 90.2 88.8 90.3 2.0 2.3 1.9 2.1
% increase y-y 1.4 1.5 (0.3) (3.4) (2.6) (0.7) 0.8 (1.5) 2.2 2.5 2.3 2.3 2.3 2.0 2.0 2.1 2.5 2.1 1.7
Supply
North America 14.2 14.3 13.9 14.2 14.1 14.3 14.5 14.3 14.5 14.3 13.9 14.2 14.2 14.4 14.3 14.0 14.2 14.2 14.3 (0.1) (0.7) 0.0 0.2
Europe 5.3 5.0 4.7 4.9 4.5 4.2 4.5 4.5 4.5 4.2 4.1 4.2 4.2 4.2 3.9 3.8 3.9 4.0 4.0 (0.3) (6.7) (0.3) (6.0)
Pacific 0.6 0.6 0.6 0.7 0.6 0.7 0.6 0.6 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.1 16.7 (0.0) (3.6)
OECD 20.1 19.9 19.3 19.7 19.1 19.2 19.7 19.4 19.7 19.2 18.7 19.1 19.2 19.3 18.9 18.5 18.8 18.9 19.0 (0.2) (1.0) (0.4) (1.8)
FSU 12.2 12.8 12.8 13.0 13.2 13.4 13.5 13.3 13.5 13.6 13.5 13.7 13.6 13.7 13.8 13.7 13.8 13.8 13.8 0.3 2.3 0.2 1.1
Europe 0.2 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0
China 3.7 3.7 3.8 3.7 3.8 3.8 3.8 3.8 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 3.9 0.1 2.6 0.0 0.3
Other Asia 3.8 3.7 3.7 3.6 3.6 3.6 3.6 3.6 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 0.1 2.8 0.0 0.3
Latin America 3.9 3.9 4.1 4.3 4.3 4.3 4.4 4.3 4.5 4.6 4.7 4.7 4.6 4.8 4.9 4.9 5.0 4.9 5.1 0.3 7.0 0.3 6.5
Middle East 1.8 1.7 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.6 1.6 1.6 1.6 1.6 1.6 0.0 0.0 (0.1) (5.9)
Africa 2.5 2.5 2.6 2.6 2.6 2.6 2.5 2.6 2.6 2.6 2.5 2.6 2.6 2.6 2.6 2.7 2.7 2.7 2.7 0.0 0.0 0.1 2.3
Non OECD 28.0 28.5 28.8 29.0 29.3 29.5 29.7 29.4 30.0 30.2 30.2 30.4 30.2 30.4 30.6 30.6 30.8 30.6 30.9 0.8 2.7 0.4 1.4
Processing gains 2.1 2.2 2.2 2.3 2.3 2.3 2.3 2.3 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.3 (0.1) (4.3) 0.0 0.0
Other Biofuels 0.2 0.3 0.4 0.3 0.4 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.1 25 0.1 14
Non OPEC 50.4 50.9 50.7 51.3 51.1 51.4 52.1 51.5 52.3 52.0 51.6 52.3 52.0 52.4 52.2 52.0 52.4 52.3 52.8 0.5 1.0 0.3 0.5
OPEC 11 crude 28.8 28.2 28.8 26.2 26.3 26.7 26.5 26.4 26.7
Iraq crude 1.9 2.1 2.4 2.3 2.5 2.6 2.5 2.4 2.4
OPEC NGLs 4.4 4.5 4.4 4.6 4.5 4.7 4.8 4.7 5.1 5.2 5.6 5.8 5.5 6.2 6.3 6.4 6.5 6.3 6.7 0.8 16.3 0.9 16.0
Total supply 85.6 85.7 86.5 84.4 84.3 85.3 85.9 85.0 86.5
Call on OPEC crude* 30.4 31.1 31.1 28.6 28.5 29.2 29.1 28.8 28.9 28.9 30.0 29.9 29.4 29.5 29.4 30.7 31.3 30.2 30.8 0.6 2.2 0.8 4.6
Implied stock change - mb/d 0.3 (0.8) 0.3 (0.1) 0.2 0.0 (0.2) (0.0) 0.2
Implied stock change – mmb 31 (73) 96 (8) 17 1 (16) (5) 16
OECD stock change - mmb 94 (62) 73 58 (34) (45)
Note: Demand estimates are Nomura estimates and 2010 supply estimates are IEA estimates
*Call on OPEC crude from Q2 2010 onwards is total demand minus Non OECD supply and OPEC NGLs, such that the implied stock change in forecast years is zero
Source: International Energy Agency, Nomura estimates
Exhibit 24. Nomura Brent oil price forecasts

1Q10 2Q10 3Q10F 4Q10F 1Q11F 2Q11F 3Q11F 4Q11F 2009 2010F 2011F 2012F LT
Brent 76.6 78.6 87 90 92 94 95 100 62 83 95 110 75
Source: Nomura estimates

Exhibit 25. Upcoming events calendar

September
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
1 2 3 4 5
DOE Weekly Report Singapore Oil Stats
OPEC Production
survey by Reuters
6 7 8 9 10 11 12
Japan PAJ Stats EIA STEO Singapore Oil Stats IEA OMR
CFTC Commitment OPEC Monthly
of Traders DOE Weekly Report
13 14 15 16 17 18 19
Japan PAJ Stats DOE Weekly Report Singapore Oil Stats
CFTC Commitment Brent Contract
of Traders Expiration
20 21 22 23 24 25 26
China Oil Stats Japan PAJ Stats DOE Weekly Report Singapore Oil Stats
CFTC Commitment WTI Contract
of Traders Expiration
27 28 29 30
India Oil Stats Japan PAJ Stats DOE Weekly Report Singapore Oil Stats
CFTC Commitment Japan METI data
of Traders
*some dates are tentative

October
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
1 2 3
OPEC Production
survey by Reuters
4 5 6 7 8 9 10
CFTC Commitment
of Traders
11 12 13 14 15 16 17
CFTC Commitment EIA STEO IEA OMR Brent Contracts
of Traders OPEC Expiration
Monthly
18 19 20 21 22 23 24
China Oil Stats Japan PAJ Stats DOE Weekly Report Singapore Oil Stats WTI Contracts
CFTC Commitment Expiration
of Traders
25 26 27 28 29 30 31
India Oil Stats Japan PAJ Stats DOE Weekly Report Singapore Oil Stats Japan METI data
CFTC Commitment
of Traders
*some dates are tentative
Source: Nomura
Asia Oil & Gas/Chemicals Research team
Name Sector/country coverage Telephone Email

Cheng Khoo Regional Head, Asia, & China +852 2252 6180 cheng.khoo@nomura.com
Michael Lo, CFA Oil Market +852 2252 6225 michael.lo@nomura.com
Xavier Grunauer, CFA Australia +852 2252 6215 xavier.grunauer@nomura.com
Yong Liang Por, CFA Taiwan, Thailand +852 2252 6220 yongliang.por@nomura.com
Gordon Wai China +852 2252 6176 gordon.wai@nomura.com
Cindy Park Korea +822 3783 2324 cindy.park@nomura.com
Anil Sharma India +91 22 4037 4338 anil.sharma.1@nomura.com
Ravikumar Adukia, CFA Associate +91 22 6723 5787 ravikumar.adukia@nomura.com
Saurabh Bharat Associate +91 22 3053 2835 saurabh.bharat@nomura.com
Sanat Satyan Associate +91 22 6723 4076 sanat.satyan@nomura.com
Chris Chang Associate +822 3783 2316 chris.chang@nomura.com

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Nomura - Oil &amp; Gas, Chemicals 30 Sept 2010

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Oil & Gas/Chemicals | G L O B A L

Michael Lo, CFA +852 2252 6225 michael.lo@nomura.com

This week’s highlights

Oil Market Update Analysts

Nomura 1 30 September 2010

Exhibit 1. Price summary

Exhibit 2. 2010 YTD performance of commodities in CRB Commodity Index

Source: Bloomberg, Nomura research

Nomura 2 30 September 2010

Weekly events summary

2. US may end deepwater drilling ban ‘soon’, says US Interior Secretary

Key oil market events during the week

2. US may end deepwater drilling ban ‘soon’, says US Interior Secretary: On 28

Exhibit 5. US offshore rig count

90 Rig Count Rig Count YoY YoY 80%

Source: Baker Hughes, Bloomberg, Nomura research

3. Iraq plans to increase offshore oil-loading capacity: According to the Iraqi

Nomura 3 30 September 2010

Exhibit 6. Major Nigerian oil projects

Nomura 4 30 September 2010

Exhibit 7. Crude oil runs

Source: IEA Source: IEA

United States OECD Europe

Source: DOE Source: IEA

Source: Petronet Source: Petroleum Association of Japan

Nomura 5 30 September 2010

Exhibit 8. OECD inventories

Source: IEA * includes both crude and products Source: IEA

Exhibit 9. Crude inventories

Source: IEA Source: DOE

OECD Europe China

Source: IEA Source: Xinhua News Agency, Thomson Reuters * commercial

Source: Petronet Source: Petroleum Association of Japan

Nomura 6 30 September 2010

Exhibit 10. OECD imports

Source: IEA Source: IEA

Exhibit 11. Crude oil imports

Source: IEA Source: DOE

OECD Europe China

Source: IEA Source: Thomson Reuters

Source: Petronet Source: METI, Thomson Reuters

Nomura 7 30 September 2010

Exhibit 12. Total product demand

Source: IEA Source: DOE

OECD Europe India

Source: IEA Source: Thomson Reuters

Source: Petronet Source: METI, Thomson Reuters

Nomura 8 30 September 2010

Exhibit 13. Gasoline demand

Source: IEA Source: DOE

OECD Europe China

Source: IEA Source: Thomson Reuters *Implied Demand

Source: Petronet Source: METI, Thomson Reuters

Source: Thomson Reuters

Nomura 9 30 September 2010

Exhibit 14. Gasoline inventories

Source: IEA *Industrial stocks Source: DOE

OECD Europe China

Source: Petronet Source: Petroleum Association of Japan

Source: Thomson Reuters

Nomura 10 30 September 2010

Exhibit 15. Distillate demand

Source: IEA Source: DOE

Nomura - Oil & Gas, Chemicals 30 Sept 2010

Nomura - Oil & Gas, Chemicals 30 Sept 2010